Tag Archives: disclosure

The FTC showed that they were taking social media endorsements seriously when they sent a series of 91 letters warning brands and endorsers alike about the need for disclosures. 45 letters were sent to brands and the remaining 46 letters were sent to the individual endorsers who posted on Instagram. The sheer number of warning letters, 91!, coupled with the FTC showing the form letter they will use for future violations signals this issue will likely come up again for brands and organizations who aren’t following the Endorsement Guides.

Product categories

Four main categories make up the majority of the 45 warning letters, with some significant overlap between some of those categories. I broke down the products into the following categories and distinguished between them as follows:

Beauty – 14 letters. Products that are marketed towards changing your appearance without some associated health benefit (which would put it in the Health category). Admittedly, some of the products are difficult to classify between Beauty and Health. Cosmetic goods like eyeliner fall neatly into a Beauty category, but what about a product that claims to give your body the vitamins it needs specifically so your hair doesn’t break in the winter? I erred on the side of any health-related claim, no matter if it has clinical support or not, went into Health. So these 14 letters, still the most of any category, are only products that make no health-related claims.

Fashion – 10 letters. Clothes, shoes, and accessories. Also includes subscription boxes that primarily have products in this category.

Health – 9 letters. Products whose primary purpose is to impact your health or who make some kind of health-related claim. Includes external health products (blister bandages), internal health (vitamins), or items that could also be considered Beauty products but are using some kind of health claim (Flat Belly Tea and Flat Tummy Tea, both have a primary Beauty purpose but use marketing around giving you more energy…I’m not making a judgment on the veracity of those claims, just how to categorize them).

Food – 9 letters. Food and beverage products including subscription boxes with food products. I also included alcohol in this category–not because I consider them food but because they are consumable goods most similar to food. If you want to break it out then there was a single vodka product in the 45.

Gadgets – 1 letter. There was a single gadget product (a hoverboard) that didn’t fit into the other categories and seemed different enough from Toys.

Toys – 1 letter. There was a single toy (My Little Pony) that received a letter.

Retail – 1 letter. There was a single letter to Cabela’s, an outdoor/hunting/fishing focused retailer. The picture featured a celebrity in front of dozens of fishing poles, none of which are easily identifiable as to brand, but beneath a large sign showing the store was Cabela’s.

What to take from these data: Certainly if your brand operates in one of the categories then the FTC has shown it is potentially looking at your endorsements. But the intentional inclusion of three categories with just a single letter is, I think, an obvious shot across the bow warning everyone that any endorsement may be scrutinized by the FTC.

Endorser engagement

To look at engagement I only looked at the number of likes or hearts (since all the posts were on Instagram) that the posts received by the time the FTC printed them to include in the letters. While posts also received comments, those are both a more substantive form of engagement that could require further classification and, frankly, I don’t have that kind of time. But more importantly, Instagram posts prominently show the number of Likes/Hearts a post receives while the callout for the number of comments is both lower, smaller, and in a more subtle font color than the simple engagement count.

Individually, there was a large range of endorser engagement for the posts targeted by the FTC. The highest single engagement in a post was a video that was viewed 1.4 million times (videos on Instagram have their views displayed most prominently, Likes/Hearts are buried lower in the description for videos than for pictures). The highest non-video engagement belonged to Jennifer Lopez for her post about Beluga Vodka (631,000). The lowest engagement on a targeted post Belonged to Farrah Abraham for her post about TeeSpring, a t-shirt printing company (1,550). This shows the FTC was considering a broad range of posts in terms of how effective they were in engaging with customers. Overall, the numbers were considerable at the category level (note that some letters included multiple posts which were used for the average calculation rather than just the number of letters received):

Beauty Total Engagement: 2,280,364. Average Engagement: 142,523. If you removed the video that received 1.4 million views from this calculation (the only video post in all the FTC letters) then the total engagement drops to 880,364 and the average drops to 58,691–those numbers would significantly drop the Beauty category in these rankings.

Fashion Total Engagement: 1,844,686. Average Engagement: 141,899.

Food Total Engagement: 1,656,756. Average Engagement: 165,676.

Toys Total Engagment: 501,000. Average Engagement: 501,000.

Health Total Engagement: 170,791. Average Engagement: 17,079.

Retail Total Engagement: 85,800. Average Engagement: 85,800.

Gadgets Total Engagement: 28,400. Average Engagement: 28,400.

I chose to rank the product categories above in order of total engagement. If they were ranked by average engagement then Toys would have easily led the pack. I’m not sure if that’s the subject matter (My Little Pony is popular, after all) or the category itself. The individual who endorsed My Little Pony, Vanessa Hudgens, is one of the few who received a warning from the FTC for multiple posts–her other endorsement for Graze Snacks only gained 269,000 Likes/Hearts, so there is something to be said for My Little Pony’s draw.

What to take from these data: The difference between the number of letters sent to brand categories versus the total and average engagement received shows that the FTC is looking at a wide variety of effectiveness when it comes to Endorsement Guideline enforcement. Using high-profile endorsers or a series of less well-known endorsers can equally draw the FTC’s attention. Bottom line: if your brand is considering engaging an endorser than you are probably hoping for more engagement than the minimally engaged post in the FTC’s letters (1,550); meaning you are potentially in the crosshairs.

Attempted Disclosures

The vast majority of posts the FTC took issue with made no attempt whatsoever to disclose a relationship between the endorser and the brand. Of the 45 brands that received complaints, only 11 of them had some attempt to disclose that relationship, yet none of them were sufficient to avoid receiving the FTC letter. The FTC has not expressly blessed any form of disclosure, the closest they have come is saying that starting a post with “#Ad:” may be sufficient.

The FTC’s form letter, customized for each violation, calls out that disclosures need to be “clear” and “conspicuous” (FTC quotes, not mine). The FTC says this standard is met by making the disclosure unambiguous and it should stand out. Since social media platforms such as Instagram don’t allow for text formatting, the ability for a disclosure to stand out largely depends on its placement and the context of the entire post. That became one of many contextual elements called out by the FTC. In a few instances noted below, the FTC added to the form letter to address attempted disclosures as inadequate.

Examples of inadequate disclosures:

“Thanks…” Five of the complained about posts did contain some form of thanking the brand. The FTC called these out as being inadequate since a satisfied customer might equally thank a brand–just a thank you to the brand did not communicate that the endorser was being paid in money or products in exchange for the post. The FTC also noted no difference between text that thanked the brand by tagging them or just by using their name.

Disclosure outside visible space. Every letter sent by the FTC mentioned that a consumer shouldn’t have to click the “More…” link to read text that couldn’t initially be loaded in order to see a disclosure. One example violation, Shea Moisture, had so much text that the screenshot couldn’t capture all of the text–it is unknown if that post had any disclosures by the end of the text. The standard text the FTC put in their letter mentions the first three lines of an Instagram post being visible for mobile users, strongly suggesting that’s where the FTC would like to see those disclosures.

“Partner.” In two of the Instagram posts, the term #Partner (or a brand specific #fffpartner) were used in a post. The FTC said that this hashtag is insufficient to convey that the post was sponsored. The FTC recommended the hashtag #Compeed_Partner (that’s how they spelled it, so I think they meant #Comped_Partner although it’s interesting to note the FTC thinks “Comped” is sufficient to communicate “Compensated”) as one “more effective” option (note they did not explicitly say it would be enough, just better than what was done). In the example of #fffpartner, the FTC suggested that “FabFitFunPartner” would be “clearer” (bringing up the same caveat as with the “more effective” option). It is also interesting that the FTC lists a hashtag with a brand name and partner as a potential option even though that doesn’t include a specific call-out about pay/compensation.

Multiple hashtags. The FTC also called out when disclosures are made surrounded by other hashtags or tags. One example post, by Scott Disick for Pearly Whites (teeth whiteners), ended a paragraph of text accompanying his photo with the URL to the product’s website, the hashtag #nosensitivity, the disclosure hashtag #ad, and ending with another tag of the sponsoring brand’s Instagram account. The FTC noted that the attempted disclosure here may be obscured by putting it at the end of the text and in the middle of multiple hashtags and mentions.

#sp. This abbreviation for “sponsored” is likely not to be understood by consumers according to the FTC.

Employment and ownership. While being paid for an endorsement is an obvious material connection to the sponsor thereby requiring a disclosure under the Endorsement Guidelines, other material relationships can exist without being explicitly paid for. One such material connection is if you are the owner of the brand, as the FTC pointed out in their letter concerning Sean Combs’ AQUAhydrate post, a bottled water company in which Mr. Combs is a part owner. With other FTC actions addressing employee disclosures in social media posts (the Playstation Vita case), it is clear that the FTC considers employment and ownership worth of disclosing in posts about that brand.

“My friend…” Although not expressly called out in a letter customization, one post in the batch attempted to reference the sponsoring brand as being a friend of the endorser. This was insufficient as a disclosure.

What to take from this: The FTC has still never provided a clear way to disclose an endorsement. They have, instead, taken shots at attempts to disclose and have hinted at various techniques that might be more effective at disclosing a relationship, but nothing so concrete as “If you say X then you have met your obligations under the Endorsement Guidelines.” These letters still don’t get us to a place where brands know exactly what to do, but we’re getting closer by knowing what methods are not sufficient. If your disclosure program isn’t exceeding these complained-about tactics listed above then you need to up your disclosure game.

Perceived Endorsements

One post in the batch of letters caught my attention in the list. The FTC sent letters to both the Dunkin’ Brands Group (owner of Dunkin’ Donuts) and Heidi Klum over the following post (poor quality because grabbed from the PDF):

I thought the inclusion of this post was a bit strange because I wasn’t sure if it was an actual endorsement. Yes, Ms. Klum is sitting behind a very obvious cup showing the Dunkin’ Donuts marks. But she is doing so because the picture was taken on the set of America’s Got Talent (AGT), a talent competition show with which I am familiar mostly because my 11-year-old son loves it. Dunkin’ Donuts sponsors the cups that sit on the judges’ table during episodes–in previous years the cups have been sponsored by other brands.

While it is entirely possible that Dunkin’ Donuts, in addition to whatever deal they made with the AGT producers for cup branding, also made a deal with Ms. Klum for her to post this picture. It is also possible that Ms. Klum, in the middle of doing a job that she has posted behind the scenes photos from in the past, just did another picture and took advantage of the fact that most fans of the shows would recognize the cup and know that she was on set (which can also be made out in the background, although not easily). The text accompanying this original post, “Guess what I am doing today,” makes no mention of the Dunkin’ brand or even something tangentially related to the beverage itself.

“This is NOT a sponsored Dunkin Donut post … and I did NOT get paid for this!!!” You can tell she’s serious because it has three exclamation points.

What to take from this: When it comes to social media influencers and celebrities, any inclusion of a brand could raise the suspicion of a paid-for endorsement. There’s little you can do from the brand perspective to prevent these kinds of posts (in fact, you’re not so secretly hoping you get them) but to avoid upsetting the FTC it would be an excellent idea to have a strong disclosure program for the endorsements your brand does pay for. Then when the rare unpaid, innocent endorsement comes along you can point to your existing program as support for your claim that this was not the kind of post that requires a disclosure.

IMPORTANT DISCLAIMER

SoMeLaw Thoughts are entirely my own opinion about social media legal issues and not the statement, opinion, or in any other way affiliated with Dell.

This means I could be completely wrong about everything I post here. Sure, I’ve practiced for over ten years in technology law and have supported Dell’s social media team for a fair amount of time, but if you get five lawyers in a room and ask a question you’re likely to get seven different opinions. Oh, and it’s a really boring room. And someone will probably start quoting Latin. So I could be totally wrong here.

This is also not specific legal advice for you. I don't know you. Even if I know you I didn't write this for you, I wrote it for the blog and you're reading it. You want legal advice? Hire an attorney! A good one.